The competitive automotive sector is a good example for others to follow, says the Manufacturing Circle. Picture: PHILLIP NOTHNAGEL
The competitive automotive sector is a good example for others to follow, says the Manufacturing Circle. Picture: PHILLIP NOTHNAGEL

Manufacturing production saw its first contraction since September 2018, surprising analysts who expected marginal growth in June. 

Manufacturing production decreased 3.2% in June, after the sector saw subdued growth of 0.4% in May. This was in stark contrast to the Bloomberg consensus of growth of 1.6%. 

The biggest drags were a 7.7% fall in petroleum, chemical products, rubber and plastic products, a 5.1% drop in basic iron and steel, nonferrous metal products, metal products and machinery, and a 4.9% decrease in wood and wood products, paper, publishing and printing.

While the sector rebounded from a contraction in the first quarter, growth of just 0.6% in the second quarter will not boost the economy much.

Graphic: RUBY-GAY MARTIN
Graphic: RUBY-GAY MARTIN

Statistics SA’s manufacturing production index, which was at 100 points in 2015, came in at 99.1 points in June, down from 103.2 points in May.

The monthly changes in factory output measured by Statistics SA usually tend to be foreshadowed by the Absa-sponsored purchasing managers' index (PMI), which is published on the first business day of each month.

The PMI, which gauges activity in the manufacturing industry, rose to 46.2 index points from 45.4 in May, which still indicates a contraction.

However, in recent months, the PMI and production figures have not been in tandem.

menons@businesslive.co.za